A revived housing market will propel a continuing economic recovery for the state and Orange County in 2014, with only the federal government proving a drag on the revival, Chapman University economists said this week.

“Our economy — California and Southern California — has been underperforming the U.S. growth since 2007, since the recession started,” said Esmael Adibi, director of the university’s Anderson Center for Economic Research. “But last year was the first year that job creation surpassed job creation at the U.S. level, and this year and next that trend is going to continue mainly because our biggest drag was in the housing market and now it’s coming back.”

The housing market’s resurgence also boosts other markets such as construction and retail with homes being built and residents filling them with furniture, Adibi said.

“The only sector to be under pressure is the federal government with sequestration,” Adibi said, referring to the automatic spending cuts approved by federal lawmakers.

“In the short term that’s going to be negative for the economy,” Adibi said. “But over the long term it is healthier for our government to have a reduction in the deficit.”

The “only sector that’s going to show job losses is the federal government, which some people say is a blessing because they’ve grown too much,” Adibi added.

Federal money will fund the state-managed Affordable Care Act, which will expand insurance coverage, but that too will offer mixed blessings to the economy, Adibi said.

“Like anything else you have positives and negatives,” Adibi said. “Some people will gain and some will lose. Hospitals will benefit from the Affordable Care Act, which will really kick in 2014, but insurance companies in some areas will suffer a little bit.”

Physicians should see an increased demand, but small business owners will have to pay more to cover employees, Adibi said.

“Some (small business owners) will be able to pass it on to consumers, but some will have to eat it,” Adibi said.

Orange County’s economy will also benefit from an improving tourist industry, Adibi said.

“Obviously we see strength all over the state, but Orange County is going to benefit proportionally better than the state as a whole … with other sectors outperforming the state such as healthcare, leisure and hospitality, thanks to destinations like Disneyland and Knott’s Berry Farm,” Adibi said.

Chapman’s economists say housing affordability is at an all-time high nationally.

Job growth was above average at 2.3 percent last year, the economists say.

Construction spending is expected to increase by about 16 percent in the coming fiscal year, the economists say.

The Chapman forecast projects a gain of 32,000 jobs in Orange County, or a growth rate of 2.3 percent, and 307,000 jobs in the state, or 2.1 percent higher, this year. Construction jobs should increase at 4.3 percent in Orange County, the experts predict.

The median family income in the county is expected to rise from $83,000 last year to $88,000 in 2014.

Low mortgages rates and home prices coupled with rising income will fuel higher demand for housing, the experts predict. A corresponding increase in housing prices will follow.

Home prices are forecast to rise by 8.8 percent in Orange County, compared with 7.8 percent statewide.